STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ADVANTAGE SERVICES OF )

SOUTH FLORIDA, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-5496BID

) DEPARTMENT OF MANAGEMENT SERVICES, )

)

Respondent, )

and )

)

XEROX CORPORATION, )

)

Intervenor. )

)

RECOMMENDED ORDER

On October 30, 1995, Petitioner, Advantage Services of South Florida, Inc. (Advantage) filed a petition for formal hearing protesting the intended award of invitation to bid (ITB) No. 4-600-370-K by the Department of Management Services (Department). Subsequently, the Intervenor, Xerox Corporation (Xerox), an apparent successful bidder, was allowed to intervene in the cause.

The Department filed a motion for summary recommended order on November 17, 1995. Both Petitioner and Intervenor filed written responses to the motion.

Pursuant to notice, the parties were afforded argument on the motion during a telephone conference call conducted on December 14, 1995. For purposes of this order, statements of fact represented by Petitioner have been accepted as accurate. The parties have been represented by counsel in this matter.

APPEARANCES

For Petitioner: J. Daniel Leftwich

BERRY & LEFTWICH

2000 K Street, Northwest, Suite 450

Washington, D.C. 20006

and James Leech

Post Office Box 7473

Fort Lauderdale, Florida 33338

For Respondent: Cindy Horne

Assistant General Counsel Department of Management Services Office of the General Counsel 4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

For Intervenor: Lawrence P. Stevenson

Hume F. Coleman HOLLAND & KNIGHT

Post Office Drawer 810 Tallahassee, Florida 32302

STATEMENT OF THE ISSUES

Whether the petition should be dismissed for failure to comply with Section 120.53(5)(b), Florida Statutes.

PRELIMINARY STATEMENT

This cause began when the Petitioner filed a challenge to an intended award of ITB No. 4-600-370-K that determined its bid proposals had been nonresponsive to the ITB. Petitioner sought the reversal of that decision and the contract award as it claimed Advantage was the low bidder in each of the categories in which it had submitted a bid.

The case was referred to the Division of Administrative Hearings for formal proceedings on November 15, 1995. The case was scheduled for hearing on November 30, 1995. Thereafter, the parties filed a joint motion for continuance which was granted and the matter was rescheduled for December 18, 1995.

A conference call was conducted with the parties on December 14, 1995, during which the hearing was cancelled. This order is entered pursuant to Rule 60Q-2.016, Florida Administrative Code, which provides that whenever ruling on a motion is dispositive of a matter, it shall be incorporated in a recommended order.

FINDINGS OF FACT

1. The Petitioner filed bids for ITB No. 4-600-370-K which, if responsive, were the apparent low bid for the Class 3 bid and next to lowest for Class 4 and

   5 categories of copier equipment listed in the ITB. [Petition, page 8]

   
   

2. On October 16, 1995, the Department posted the intended awards and disqualified all three of Petitioner's bids as nonresponsive. [Petitioner's memorandum in opposition to Respondent's motion for summary recommended order (MEMO), paragraph 1]

   
   

3. The Petitioner filed a notice of protest against the disqualification of its bids on October 19, 1995. [MEMO, paragraph 1]

   
   

4. The petition for formal hearing was filed with the Department on October 30, 1995. [MEMO, paragraph 1]

   
   

5. The petition for formal hearing alleged, in part:

   
   

   1. SUMMARY OF GROUNDS FOR PROTEST

      
      

      ...The Division of Purchasing ("Division") disqualified all three of Petitioner's bids on vague grounds identified by three words: "Disquality -- Manufacturers Certification. " See Ex. 3 hereto at 1. There are two provisions in the ITB that require the

      "certification" of the Original Equipment Manufacturer ("OEM"). See Ex. 1 hereto at

      3 and 32. Since the State has not seen fit to adequately identify which provision(s) are at issue, Petitioner is required to address both provisions that might apply. Both of these requirements are completely arbitrary,

      irrational and, most importantly, anticompeti- tive, for the reasons described further in Section 3 below. The "certification" require- ments are arbitrary and irrational because they are not designed to obtain the equipment at issue for the lowest price. Indeed, they ensure that the State will pay higher prices than it would without the requirements.

      Neither are the "certification" requirements rationally related to the quality of the equip- ment that was bid by Petitioner or the other bidders, including the OEMs. Finally, these requirements are blatantly anticompetitive be- cause they place the right to exclude all other competitors in the hands of the OEMs, which can deny such certification with impunity, ensuring that only those OEM bidders will prevail, as was the outcome here. This preferential treat- ment not only runs counter to the express intent of the legislature to promote free and open competition, it also raises serious anti-

      trust concerns. Disqualification of Petitioner's bids on the grounds presented by the Division should be reversed and the contract awards

      should be adjusted accordingly.

      * * *

      The preferential treatment provided to Xerox, Kodak, and other OEMs by insertion of the "certification" requirements in this ITB is consistent with a longstanding history of

      such anticompetitive treatment of independent providers of the equipment and service at issue, resulting in higher prices (but not necessarily higher quality) for the State's taxpayers. Petitioner's recent experience

      in dealing with the State on these matters is also consistent with this pattern of bias toward OEMs.

      * * *

      3. BASIS OF PROTEST

      
      

      A. The Division of Purchasing Has Acted Arbitrarily and in Restraint of Trade

      * * *

      Petitioner has identified two potentially applicable provisions that the Division could

      be relying on for its disqualification decision. First, in the ITB's definition of "acceptable equipment" it states that bids for classes 3,

      4, 5 and 6 shall be for "new and newly remanu-

      factured equipment only," and that "newly remanufactured equipment must be certified by the manufacturer." Ex. 1 at 3. This pro- vision also states that "remanufactured" equip- ment is not acceptable. Second, the ITB requires certification by the manufacturer

      as to the copy speed, recommended monthly copy volume, and other basic specifications of the equipment models being bid. Ex. 1 at 32.

      Both of these provisions are irrational, arbitrary, and clearly anticompetitive.

      * * *

      The Division's definition of acceptable equipment bears no relationship to the actual remanufacturing processes used by Petitioner or Xerox. Even if Xerox certifies its own "remanufactured" equipment, the State only receives assurances that the remanufacturing process used by Xerox meets certain standards. Petitioner certifies that its equipment meets certain quality and performance standards, just like Xerox does. There is no rational reason why self-certification of the equipment

      at issue would provide any different assurances of quality for the State.

      * * *

      2. Certification by the OEM of Copy Speed and Other Basic Specifications

      
      

      Petitioner provided a sworn verification that its equipment meets the copy speed, recommended monthly copy volume, and other minimum specifications for each category of equipment for which it submitted bids. Its certification is based on the same procedures used by Xerox to certify its own equipment.

      There is no rational reason why that certifi- cation cannot meet the needs of the State.

      To insist upon certification only from the OEM is an arbitrary and anticompetitive requirement not related to quality or designed to achieve the lowest price.

      * * *

      This requirement also is blatantly anticompet- itive. Petitioner is in direct competition

      with Xerox for the sale and maintenance of the equipment at issue. It is irrational for the Division to expect Xerox to provide such certification to its competitors, even as to this type of uncontroversial information unless award to Xerox is the intended goal.

      
      

6. The ITB required a manufacturer's certification which specified a notarized certification of the copy speed, recommended monthly copy volume, and other minimum specifications for the equipment bid. [Exhibit 1 to the Petition]

7. The bids submitted by Petitioner included a certification executed by Advantage's president, Jane Beekmann. [MEMO, paragraph 3]

   
   

8. The equipment specified by Advantage was manufactured by Xerox but was remanufactured by Advantage. [MEMO, paragraph 3, and as represented by Petitioner's counsel]

   
   

9. Advantage maintains it may certify its remanufactured equipment in the same manner that Xerox certified its equipment. [MEMO, paragraph 5]

   
   

10. The ITB provided, in pertinent part: ACCEPTABLE EQUIPMENT

    ...Bids for Classes 3, 4, 5 and 6 shall be for new and newly remanufactured equipment only. In Classes 3, 4, 5 and 6 newly remanu- factured equipment must be certified by the manufacturer.

    
    

11. The ITB further provided, at page 32:

    
    

    This is to certify the manufacturer's recommended monthly volumes and certified copy speed (specify from the glass or document feeder) for the machines listed below. Monthly volume indicates the number of copies which can be made per month by the machine without causing excessive downtime. It does not necessarily denote the maximum number of copies that can be made by that particular machine.

    NOTE: This must be executed by the manu- facturer and must be notarized. Dealers are not authorized to sign this certification form.

    Failure to submit this certification with

    your bid shall result in disqualification of bid.

    
    

12. The certifications provided by Petitioner identified the machines proposed by Advantage as the Xerox 5100, the Xerox 1090 w/finisher; and the Xerox 1075 w/finisher. Each of these certifications identified Advantage as the name of the manufacturer. [Exhibit C to the motion not disputed by Petitioner]

    
    

13. Petitioner did not manufacture the Xerox 5100, the Xerox 1090 w/finisher; or the Xerox 1075 w/finisher. [Petitioner represents it is the remanufacturer, MEMO, paragraph 2]

    
    

14. Petitioner maintains, and for purposes of this order it is accepted, that Advantage is the remanufacturer of the Xerox 5100, the Xerox 1090 w/finisher; or the Xerox 1075 w/finisher. [MEMO, paragraph 2]

    
    

15. Petitioner did not timely challenge the specifications for ITB No. 4- 600-370-K.

    CONCLUSIONS OF LAW

    
    

16. Section 120.53(5)(b), Florida Statutes, provides:

    
    

    ... With respect to a protest of specifications contained in an invitation to bid or in a request for proposals, the notice of protest shall be filed in writing within 72 hours after the receipt of the project plans and specifications in an invitation to bid or request for proposal, and the informal written protest must be filed within 10 days after the date the notice of protest is filed....

    
    

17. The thrust of the petition filed in this case is a challenge to the specification that required a manufacturer's certification for equipment bid. Petitioner failed to timely raise a challenge to this requirement and is barred from incorporating such challenge in the instant case. Capelletti Brothers v. Department of Transportation, 499 So.2d 855 (Fla. 1st DCA 1986).

    
    

18. Petitioner's efforts to restate its complaint so that the agency's decision should be reviewed as arbitrary, vague, and an improper single source procurement belie the plain language of the ITB and the petition filed in this cause. The term "manufacturer" is not vague or ambiguous. Nothing in the ITB allowed a bidder to equate "manufacturer" with "remanufacturer."

    
    

19. Petitioner's complaint centers on the certification requirement of the ITB. Such certification is a specification of the ITB that should have been timely challenged. Petitioner waived that challenge and submitted responses to the ITB under the mistaken notion that it could challenge the Department's authority to award a bid under circumstances where, as it claims, the specification gave one bidder an advantage over another. If true, a successful challenge to the specification would have allowed all bidders the opportunity to submit bids without the manufacturer's certification.

RECOMMENDATION

Based on the foregoing, it is, hereby, RECOMMENDED:

That the Department of General Services enter a final order dismissing the petition of Advantage as an untimely challenge to the ITB specifications.

DONE AND ENTERED this 5th day of January, 1996, in Tallahassee, Leon County, Florida.

JOYOUS D. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 5th day of January, 1996.

COPIES FURNISHED:

William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307

Koger Executive Center 2737 Centerview Drive

Tallahassee, Florida 32399-0950

Paul A. Rowell, General Counsel Department of Management Services Knight Building, Suite 312

Koger Executive Center 2737 Centerview Drive

Tallahassee, Florida 32399-0950

Cindy Horne

Assistant General Counsel Department of General Services Office of the General Counsel 4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

J. Daniel Leftwich Berry & Leftwich

2000 K Street, Northwest. Suite 450

Washington, D.C. 20006

James Leech

Post Office Box 7473

Fort Lauderdale, Florida 33338

Lawrence P. Stevenson Hume F. Coleman HOLLAND & KNIGHT

Post Office Drawer 810 Tallahassee, Florida 32302

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You Should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 95-005496BID

Orders for Case No: 95-005496BID